Mexico cuts 2013 growth forecast to 3.1%

Mexico cut its 2013 growth forecast on Friday after the economy expanded less than expected in the first quarter due to slumping industrial production and near stagnant exports, AFP reports.

Latin America's second biggest economy after Brazil is now expected to grow by 3.1 percent this year instead of 3.5 percent, the finance ministry said.

The forecast was revised after Mexico posted growth of just 0.8 percent in the first quarter compared to the same January-to-March period last year -- lower than the government's 1.0 percent forecast.

Deputy Finance Minister Fernando Aportela said the new 2013 forecast "will have implications for the management of national public finances" since it will mean less revenue for the state.

Although the government will review its spending, Mexico can still rely on its oil revenue, which represents a third of the nation's tax income, with a $2.2 billion stabilization fund, Aportela told a news conference.

The finance ministry said the economy performed weaker than expected in part because there were fewer working days than in the first quarter of 2012, with Easter vacation in March instead of April like last year, and just 28 days in February.

Exports, excluding oil, grew by just 0.1 percent while industrial production fell by 1.5 percent.

"The deceleration of external demand that began in the second half of 2012 has continued in the first months of 2013," the ministry said in a statement. "The weakening of exports has begun to reflect on the performance of some indicators of domestic demand."

Mexico has recovered from a deep recession in 2009 that was sparked by the US financial crisis, and its economy grew by 3.9 percent last year.

Eduardo Gonzalez, analyst at Mexican bank Banamex, said the weak first quarter growth was partly due to a drop in demand from the United States, Mexico's largest trade partner.

"Internal and external demand for Mexican goods, whose main customer is the United States, has been very slow," Gonzalez told AFP.

Figures released by the national statistics agency, INEGI, showed a drop in output in construction, manufacturing and utilities.

The fall in industrial production was offset by a 2.8 percent increased in agricultural activity, with a rise in production of corn, wheat, avocado, beans and other fruits and vegetables, INEGI figures showed.

The services sector, ranging from media to real estate and the financial sector, saw a 1.9 percent rise.